Arthur Morrison drew on its surrounding squalor when writing A Child of Jago, his fictional portrayal of life in London's most notorious 19th-century slum. So too did Frederick Engels, who described the conditions as the worst he had seen anywhere while writing Condition of the Working Class in England.

A century later, it was a frontline in the battle between the National Front and the Anti-Nazi League, with hundreds of anti-fascist activists occupying the street in 1978 to block a far-right march into this multi-ethnic area.

Given a past that's gritty even by the standards of this part of London, the latest incarnation of Redchurch Street in the East End – as a high-end shopping destination emerging as an alternative to the West End – is all the more striking.

Margaret Howell and the shoe designer Tracey Neuls are the latest to open branches, joining APC, Sunspel and Aubin and Wills on a street whose turbulent heritage is an attraction to brands craving rebellious cool. The darkened and stripped-down shop space at the menswear store Hostem resembles the artisanal galleries that until recently could be found in greater numbers.

Such are the expectations that the area is on the way to becoming a retail centre of deliberately tattered "East End chic", that there are rumours about the imminent arrival of even more luxury brands – Christian Louboutin and Gucci. While Prada has denied it is planning to open a store, sources say Paul Smith, Ralph Lauren and Vivienne Westwood have been scoping out the area.

"I grew up here in the East End and I would never have believed that I would be opening up a shop like this, in this area," says boutique owner Debra Winstanley, who likens this part of Tower Hamlets to New York's Meat Packing district, the once unglamorous quarter now synonymous with high-end fashion.

"I wanted to give people the option of buying the type of brands that they had to go all the way to Harvey Nichols to buy, and you can see that the area is now really taking off," said Winstanley, whose shop, 11 Boundary, stands opposite the Terence Conran-designed Boundary project, which includes a boutique hotel, a restaurant and a cafe called Albion inside a converted Victorian warehouse.

Other nearby social hubs such as the private members' club Shoreditch House (a three-year-old offshoot from Soho House), the first UK branch of the Kiwi coffee-bar chain Allpress and a number of expensive bars all bolster the area's attractions, say property professionals.

According to Rob Fay, head of central London retail at property group Colliers, the area is attracting brands that love "the roughness of east London, the grit and history.

"It's becoming an alternative for type of shopper who doesn't want to spend hours in the West End on a Saturday," he added. "The retail experience here is quite different to elsewhere in London, the consumer is not surrounded by crowds and tourists and they can also soak up the atmosphere in the eclectic mix of pubs and cafes."

Not everyone on Redchurch Street is enthusiastic about its transformation. Some mourn the parallel shrinking of the art world on a street where a young Tracey Emin and Sarah Lucas once rented a shop to showcase their wares.

At their studio 1.1 gallery, open since 2003, artists Michael Keenan and Keran James say rent increases have driven out other artists whose spaces once dotted Redchurch. "The galleries have mostly moved and have been replaced by 'for hire' spaces," says James. "We are very fortunate in that the landlord has not put up the rent for eight years. We simply could not afford it otherwise."

While they had initially been excited by the prospect of customers from the Boundary and other venues "popping in" to buy, Keenan said this had not quite materialised. A significant proportion of those now visiting the street are west Londoners who arrive in taxis and leave in taxis. "It's a sort of 'safe slumming', isn't it? A lot of others would seem to be young foreign tourists."

Both artists raise a wry smile at what they describe as a 'west-east split' on the street, with some visitors stopping at the Aubin and Wills clothes store rather than venturing further along into the shabbier, less developed end of the street. It's a split that may only be temporary,

For Fay, the area is in the early stages of growth he expects will lead to shops the whole way along. "The average price points of retailers around Redchurch Street are fairly high with the likes of Anthem, Margaret Howell and Tracey Neuls targeting an affluent demographic from the surrounding offices and residential areas. It's veering towards a sort of sub-Mayfair tenant mix, so you can understand why a good few luxury brands have decided to look over there."

• This article was amended on 25 January 2012. The original referred to Auben and Wills. This spelling mistake has been corrected